What to do if employer does not pay salary

What can you do if your employer does not pay your salary or infinitely delays it?

It is quite common in India for employers to deny salary to employees, especially at the time of firing them. They think that employee’s have no options or the resources to pursue a case against an employer. In reality, there are several things an employee can do that can land an employer in real trouble. However, the knowledge regarding the same is not available in public domain and lawyer’s advice come costly. At ClikLawyer.com, we have been getting many such cases recently. We decided to share our best strategies for benefit of all Indians.

There are several legal process that can be followed by an employee to recover salary or wages. The first step that we recommend is sending a good notice from a credible lawyer who has a track record of doing such matters. However, before we tell you more about that, let us get you introduced to some basic concepts in Indian labour laws that deal with the issues of non-payment of wages or salary.

India has an entire law on payment of salary called Payment of Wages Act, though it does not apply to all levels of employees. It usually applies to low-wage blue caller workers.

Effective September 11, 2012, the wage ceiling under the Payment of Wages Act, 1936 was increased to an average wage ceiling of INR 18,000 per month pursuant to a notification by the Indian Government. If you are not covered under this act, other remedies are still available.

Let’s see what the Payment of Wages Act has to say in this matter.

Section 4 of the payment of wages Act states –

Fixation of wage period every person responsible for the payment of wages under Section 3 shall fix periods in respect of which such wages shall be payable. No wage period shall exceed one month.

Monthly Salary Distribution Requirements:

A person is working in an establishment with a wage not more than one thousand, the wage to the particular person shall be paid before the expiry of the seventh day.

A person with the wage of more than one thousand shall be paid before the expiry of the tenth day.

If the employee is terminated by the employer the wages earned by him shall be paid before the expiry of the second working day from the day his employment is terminated.

What steps can be taken by employee:

If your employer is not paying your salary, you can get these remedies.

A) Approach Labour Commissioner:

If an employer doesn’t pay up your salary, you can approach the labour commissioner. They will help you to reconcile this matter and if no solution is reached labour commissioner will hand over this matter to the court whereby a case against your employer may be pursued.

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B) Industrial Dispute Act:

An employee can file a suit under Section 33(c) of Industrial Dispute Act, 1947 recovery of money due from an employer.

When the salary is due from the employer, the employee himself or any other person authorized by him in writing on his behalf can claim recover money.

In case of the employee death, the authorized person or heirs make an application to the labour court for recovery of money due.

The court will further issue a certificate on being satisfied that the salary is due and the collector shall proceed to recover the same.

If any question arises as to the amount of money due or as to the amount at which such benefit should be computed, it would be computed according to rules under this Act.

Labour Court Time Line:

Cases have to be decided by such labour court within period not exceeding Three Months provided that where the presiding officer of a labour court considers it necessary or expedient so to do, he may for reasons to be recorded in writing, extend such period by such further period as may he think fit.

What about executives, managers and those who earn above INR 18,000 a month?

If you are manager or executive level employee, you can file a case against the company in the civil court under order 37 of Court of civil procedure. This is faster than the usual slow procedure in civil courts, called a summary suit. It is quite effective, but should not be pursued as a first resort. There are easier things at your disposal as well. Out of 100 cases, maybe 5-7 requires such effort. However, many lawyers are quick to jump to this. Before opting for this, ask your lawyer to exhaust other means.

What if company is not paying with a fraudulent or dishonest intent?

If an employee is affected by the company’s fraudulent activities, then he may seek some strong actions.

The following remedies would be available in such cases:

Employer Fraud Punishment:

Section 447 of Companies Act, 2013 lays down punishment for fraud.

Person shall be liable for imprisonment not less than 6 months which may extend to 10 years.

Fine not less than amount involved in fraud which may extend upto three times of the fraud amount.

Subsequent measures can be taken under Section 447 of the Act.

An employee can also file a criminal case against the company under Indian Penal Code.

First Step To recover unpaid salary

Step 1: We strongly recommend sending a legal notice enumerating all the actions that you may take from a credible lawyer. Before going to a lawyer, ensure that they have some track record in doing such work. From ClikLawyer, you can file a notice like this for INR 2500 only. You should not pay above INR 3000 in any case.

Step 2: If this does not work, approaching police for a cheating case, where there is enough evidence for such fraud, is critical. At this stage, it is important to prepare a detailed case file to give to police, and your lawyer should assist you in this. A majority of such complaints are not accepted due to weak drafting and lack of prima facie evidence. This is where a good lawyer can make a lot of difference. ClikLawyer charges INR 2500 to handle a police complaint matter at present.

Step 3: Where criminal case is not an option, or does not produce results, we recommend going for a summary suit or labour court, as the case may be. In our experience of handling such matters in large numbers, we can say that not more than 10% of such disputes need to go to this stage if the matter was handled well in earlier stages. Challenge is that lawyers are more comfortable and earns more money at this stage, so if they don’t have your interest in mind they might hurry to this stage.

Important things to keep in mind when you are trying to recover your unpaid salary

The notice is a very important psychological tool, and getting the salary in less time is a psychological game. If the employer understands the consequences quickly, he will settle before you need to go to court, which keeps costs low as well. However, only a few lawyers do this kind of work because it may not be very profitable for them.

There are many cases in India where employer does not pay salary for a month or couple of months and easily get away with the same. A good example is of Kingfisher Airlines. When it shut down its operations, many workers were not paid their dues. We handle a lot of such cases at ClikLawyer on a regular basis. If you are facing such a problem, don’t hesitate to call ClikLawyer helpline 011-395-85700.

12 COMMENTS

Hi ,
I joined the dreamz imc company in 8 aug and my 2 more friends are join with me but the company is very unorganized …they give my salary 20 to 22 example” if am work in jan month ..they give my salary in month of fab 22nd ……am really fedup with company

Last months my sales are low, so management was told me I will not accept you in my company, so I was resonated for my job in 27/12/2018. The issue is a company not give me my salary and not released me. So what should I do?
A company did not give me any note if your business is low, I will not release your salary not mentioned in my official letter or mail.
Last review meetings company told me we will not tolerate you in my organization so I was given Resign 27/12/2018, I was asked in my resign letter if you give me any notice period soi will be served, but the company did not accept my resign letter and not released me.
Till the time company not released my salary, I called my director so he was told me we will not pay your salary because I was paid you extra amount to your company business(Sales), My Director told me I have no fund to give you the salary.
Please help me what should I do?

One of my family member joined one company- Apexvisa in Delhi district center. She worked there for approx 2 months and due to family issue, she went on leave by informing employer.

Later on her leave was rejected and she has not been paid the due salary for 10 days.
There was no letter signed with any clause earlier. The offer was mentioned only in the mail and no such condition was mentioned to not pay in such situation.

Now company is threatening on pending salary request and employee has formally resigned when came back from leave.

sir/madam:
I am mohammed yunus from ap india ,am working in construction company as site engineer from starting onword he didn’t clear my salary,and now he compleatly hold my salary from 4 months
i am going to finish my project ,he ignoring me. plz help me to get my salary i deeply need help

Hello,
Thank You, it is very informative !
But i have an issue – I do not have anything in Writing like an Offer letter, email etc., which can prove my employment with this company.
It was through a strong reference that I joined this company, and all commercials, assurances etc, was verbally discussed & agreed, which was supposed to be given to me in Writing later.
And it was discussed & agreed that – for the first 3 months, I will not get paid immediately by my employer, and only my petrol & misc. office expenses would be paid. And at the end of 3 months, employer will review my performance & if everything is Okay, I can continue or else if (it’s not working) & I wish to discontinue, i may do so and he will pay my 3 months salary before I leave.
In case i continue, my salary from 4th month will be paid regularly (as agreed) along with my balance amount (first 3 months salary), that will be paid in installments (in addition to my regular salary)!
And after working for 5 months, I have told my employer that I will not continue further (over an email). But my employer has still not paid me my salary. And I have sent an email mentioning my settlement dues & claims, to which my employer is saying that – I have resorted to lies & false claims, and it is not acceptable!
In the past 5 months, my employer has only paid or rather Reimbursed my petrol/local travel/misc. office expenses for 4 months and the last month’s claim is yet to be paid!

Now, could you please guide me as to how to go further & get my settlement dues/salary back! (The amount due is a huge amount).
Hope you guide me in this regard.

Hello,
Thank You, it is very informative !
But i have an issue – I do not have anything in Writing like an Offer letter, email etc., which can prove my employment with this company.
It was through a strong reference that I joined this company, and all commercials, assurances etc, was verbally discussed & agreed, which was supposed to be given to me in Writing later.
And it was discussed & agreed that – for the first 3 months, I will not get paid immediately by my employer, and only my petrol & misc. office expenses would be paid. And at the end of 3 months, employer will review my performance & if everything is Okay, I can continue or else if (it’s not working) & I wish to discontinue, i may do so and he will pay my 3 months salary before I leave.
In case i continue, my salary from 4th month will be paid regularly (as agreed) along with my balance amount (first 3 months salary), that will be paid in installments (in addition to my regular salary)!
And after working for 5 months, I have told my employer that I will not continue further (over an email). But my employer has still not paid me my salary. And I have sent an email mentioning my settlement dues & claims, to which my employer is saying that – I have resorted to lies & false claims, and it is not acceptable!
In the past 5 months, my employer has only paid or rather Reimbursed my petrol/local travel/misc. office expenses for 4 months and the last month’s claim is yet to be paid!

Now, could you please guide me as to how to go further & get my settlement dues/salary back! (The amount due is a huge amount).
Hope you guide me in this regard.

Hi, I am working in an organisation that pays everyone but holds my salary for whatever reason every month until the 12-17th. This month they are not processing my October’s salary saying I took off for Diwali. They are saying I don’t deserve to get paid for last month. I have worked for 1.8 years in the company and I have received salary by the 10th only 3-4 times. Every month o beg for my salary. What should I do?

I joined a consultancy on aug 27th and i got d salary for that one week. every month on 10th they credit the salary.On 8th october they fired me and they told they will send a mail to accounts dept to make the final settlement. but still i have not received the salary for that one month. I have not signed the offer letter bcoz d head office is in sadashivanagar. Please let me know what i can do to get my salary..?? please help me out

I am Zaldy from the Philippines. I was hired last year by an Inidan Employer and my monthly salary is alway delay by 2 months. Now it is already delay going 2 months already. I am sending them an email a chat thru whatsapp but they ignoring it. I badly needed help.